Starwood 2012 Annual Report Download - page 51

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.-2013Proxy Statement 45
EXECUTIVE COMPENSATION
executive with our strategic, operational and leadership plan.
The portion of annual incentive awards attributable to strategic/
operational/leadership management performance represented 25%
of our participating named executive offi cers’ total target. Actual
incentives paid to our participating named executive offi cers for
strategic/operational/leadership performance could have ranged
from 0% to 175% of the pre-determined target amount for this
category of performance, as determined by the Compensation
Committee. The strategic/operational/leadership performance
goals were established at levels that were reasonably diffi cult to
achieve relative to historical trends and future expectations, and
generally required signifi cant effort on the part of our participating
named executive offi cers to achieve.
Evaluation Process
In the case of Mr. van Paasschen, the Compensation Committee
conducted a formal performance review process in February2013
during which the Compensation Committee evaluated how Mr. van
Paasschen performed against the strategic/operational/leadership
goals established for 2012. The Compensation Committee also
determined the extent to which our fi nancial performance goals
were achieved and whether we achieved the applicable minimum
threshold(s) required to pay annual incentive awards.
The Chief Executive Offi cer conducted an evaluation of the
other named executive offi cers (including Mr. Rivera) through the
Performance Management Process (“PMP”), which resulted in a
PMP rating for each executive. This PMP rating corresponded to
a payout range under the Executive Plan determined for 2012 by
the Compensation Committee for that rating. As noted, for 2012
the portion of the Executive Plan payouts based on PMP ratings
could have ranged from 0% to 175% of target once the target has
been adjusted to refl ect our performance. At the conclusion of his
review, the Chief Executive Offi cer submitted his recommendations
to the Compensation Committee for fi nal review and approval. In
determining the actual award payable to each participating named
executive offi cer under the Executive Plan and to Mr. Rivera, the
Compensation Committee reviewed the Chief Executive Offi cer’s
evaluation and made a fi nal determination as to how each named
executive offi cer performed against his strategic/operational/
leadership goals for 2012. The Compensation Committee also
determined, based on management’s report, the extent to which
our fi nancial performance goals were achieved and whether we
achieved the applicable minimum threshold(s) required to pay
annual incentive awards. The Chief Executive Offi cer also met
in executive session with the Board of Directors to inform the
Board of Directors of his performance assessments regarding
the named executive offi cers and the basis for the compensation
recommendations he presented to the Compensation Committee.
The evaluation of Mr. van Paasschen and the other named executive
offi cers with respect to each executive’s strategic/operational/
leadership goals for 2012 is described below.
Mr. van Paasschen’s accomplishments for the 2012 performance year included the following:
• Delivered strong fi nancial returns and exceeded targets on key
fi nancial measures, including growing adjusted EBITDA by 18.2%
and EPS before special items by 35.2% compared to 2011;
• Held a tight rein on corporate overhead (still 25% below 2007 on
a per room basis), leading to improved hotel margins over 2011;
• Drove top-line revenue through strategies to provide innovative
web and mobile bookings, cutting-edge revenue and price-
realization systems, and programs to provide better service
with guests, leading to an increase in Same Store Worldwide
RevPAR by 5% in constant dollars compared to 2011;
• Grew share of occupancy for SPG above 50% for the fi rst time
in Company history, due in part to Starwood’s innovative and
industry-leading transformation of benefi ts of the SPG program;
• Expanded the Company’s hotel portfolio by opening 69 new
hotels. Executed deals for 131 new hotels, creating a pipeline
of 400 hotels and 100,000 rooms. Re-engaged 56 existing
hotels through renewals or changes in ownership; and
• For the third year in a row, set a new Company record for
associate engagement and participation, based on a survey
of over 130,000 associates.
Mr. Prabhu’s accomplishments for the 2012 performance year included the following:
• Achieved investment grade rating for the Company and continued
to strengthen the Company’s liquidity position by executing a
new $1.75 billion credit facility on the Company’s most favorable
terms to date, and optimized pricing of senior notes by completing
redemption of approximately $1.2 billion outstanding senior notes
and issuing $350 million of new 3.125% senior notes due 2023,
resulting in signifi cant interest expense savings;
• Successfully consolidated the Company’s major IT systems
into one data center, upgrading service and security standards
while lowering costs;
• Successfully reorganized the tax department to align with the
Company’s objectives and developed new policies and procedures
to enhance the Company’s tax strategies and positioning.
Finalized implementation of certain corporate restructurings to
allow for effi cient balance sheet utilization; and
• Achieved Company fi nancial objectives while implementing a
comprehensive plan to strategically enhance the Company’s
control and compliance functions, including enhancements of
global internal controls and risk assessment processes.